Squid scam: Trend coin plunges to nearly zero after scammers steal millions from investors

Wednesday, November 3, 2021 by Robinhood Snacks |
The Wild West of “Squid Game” [Matthias Clamer/Stone via Getty Images]

The Wild West of “Squid Game” [Matthias Clamer/Stone via Getty Images]

“Squid Game” over... Halloween is past us, but trends based on Netflix's "biggest-ever" new series aren't. A crypto coin called Squid launched last week at $0.01. The “play to earn” currency professed to let buyers play online games based on the South Korean thriller. Three days later, Squid was up 44,100%, to $4.42. As it gained media coverage, Squid soared 23 million percent between October 26 and November 1, hitting nearly $2.9K. Yesterday it crashed to nearly $0.

  • “Rug pull” strategy: It's assumed that Squid's creators sold all the coins for real money, causing the coin to plummet, from $2.8K to nearly $0.
  • Scam vibes: Creators cashed out, stealing $3.3M from investors who never had a chance to sell Squid coins because of a buy-only restriction imposed by the developers.

Cracks in the honeycomb... There were red flags: a typo-ridden Squid website (“frist game,” “need pay the ticket”) and a leadership team that didn't exist on Google or LinkedIn — like: CEO Kevin Sam, "Founder of Squid Game." (BTW: Netflix reportedly said it was not affiliated with the coin). But Squid isn’t the only parody coin that’s surged recently:

  • Coin explosion: Creating alt-coins is relatively simple, and about 100 new cryptos are created daily, adding to the 13.5K already in existence.
  • Coins can be listed on decentralized exchanges as soon as they’re created, with virtually no due diligence.
  • Coin crowding: In January, Bitcoin made up 70% of total crypto value. Now it makes up less than half as trend-driven altcoins have gained traction. Two meme-inspired coins, Dogecoin and Shiba Inu, are among the top 10 cryptocurrencies.

It's a cautionary coin tale… Crypto markets and exchanges lack the controls and fraud protections that the stock market has. But SEC Chairman Gary Gensler wants the “Wild West” of crypto to be regulated in the same way the SEC oversees securities like stocks and bonds. While regulation could take years, the Squid debacle highlights the unique risk of investing in crypto without conducting due diligence.